Singapore and Malaysia Plan Joint Special Economic Zone in Johor State_blog

25 Jan, 2024

Singapore and Malaysia Plan Joint Special Economic Zone in Johor State

Singapore and Malaysia are partnering to create a special economic zone (SEZ) in Malaysia’s Johor state (JS-SEZ), adjacent to the Singaporean border. The joint effort is designed to foster stronger business connections and improved connectivity between the two countries, as the region combats a global economic slowdown. An MOU was signed between the leaders of the two countries on January 11 with a full-fledged agreement expected to be signed at the end of 2024.

The JS-SEZ is expected to attract more multinational firms into Johor as part of their risk-management strategy caused by U.S.-China trade tensions.

Background

In late October, the Malaysian Prime Minister, Anwar Ibrahim, conducted a two-day leaders’ retreat with Singaporean Prime Minister Lee Hsien Loong in Singapore. The 10th Singapore-Malaysia Leaders’ Retreat marked a significant milestone in their bilateral relations, which the two prime ministers aimed to leverage for mutual economic benefits. The occasion was also their first such bilateral interaction after the pandemic.

Key goals

The planned SEZ seeks to enhance the movement of goods and people across the Johor-Singapore Causeway, while also bolstering the overall ecosystem of Iskandar Malaysia and Singapore. Established in 2006, Iskandar Malaysia is the main southern development corridor in Johor.

The Johor-Singapore Special Economic Zone will tap into the complementary strengths of both countries to foster economic connectivity by improving cross-border flows of goods, investments, and people. – Joint Statement, 10th Singapore-Malaysia Leaders’ Retreat

Location advantage

The Johor-Singapore Special Economic Zone is set to be established within Malaysia’s Iskandar region (formerly the Iskandar Development Region and South Johor Economic Region), with the government actively promoting it as an attractive investment destination aimed at bolstering the electronics, healthcare, and financial industries as well as business-related services.

Malaysia currently has five investment corridors (a new type of SEZ): the East Coast Economic Region (ECER), Iskandar Regional Development Authority (IRDA) for Iskandar Malaysia in Southern Johor, and the North Corridor Implementation Authority (NCIA) for the North Corridor Economic Region (NCER).

Meanwhile, the sectors of focus in Malaysia’s existing development corridors are:

East Coast Economic Region: Tourism, oil and gas, manufacturing, agriculture, and education
Sabah Development Corridor: Agro-based industry, tourism, logistics, and manufacturing
Sarawak Corridor of Renewable Energy: Resource-based industry, energy, tourism
Norther Corridor Economic Region: Modern agriculture, manufacturing and design, tourism, logistics, education, and health

Improving transport linkages

Singapore and Malaysia have started construction on a light-rail link connecting Singapore and Johor Baru. The rail is expected to reach a capacity of 10,000 passengers per hour and significantly reduce the congestion on the current Johor-Singapore causeway – one of the world’s busiest land crossings. The US$2.2 billion project is expected to be completed in 2026.

Major trade and business partners

In 2022, Singapore and Malaysia ranked as each other’s second-largest trading partners, as their bilateral trade volume reached US$83.53 billion.

Additionally, during the same year, Singapore stood out as one of Malaysia’s primary sources of foreign direct investment (FDI), contributing 8.3 percent to Malaysia’s total investments for that period.

The right incentives will be key to the success of the JS-SEZ

The success of the JS-SEZ will depend on the type of incentives issued by the economic zone and how these policies are implemented. Often, special economic zones issue incentives that are not aligned with the requirements of businesses.

The leaders of both countries have mentioned that there will be special tax incentives as well as bonded warehouses. Further, both governments are exploring passport-free travel for travel between the two countries under the JS-SEZ. This will be facilitated through a QR-based clearance system qt land checkpoints on both borders.

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26 Jan, 2024

Exploring the Economic Landscape of Laos

IntroductionLaos, a landlocked country in Southeast Asia, boasts a diverse economic landscape shaped by various factors including geography, history, and government policies. Understanding the intricacies of Laos’ economy is crucial for everyone ranging from investors to policymakers. In this article, we look at the multifaceted aspects of Laos’ economic landscape.Overview of Laos’ Economic LandscapeLaos’ economy is characterized by its reliance on agriculture, forestry, and mining, with these sectors playing big roles in shaping its economy. However, in recent years, there has been a noticeable shift towards industry and manufacturing, alongside the emergence of tourism.Geographical and Demographic FactorOverview of Laos’ GeographyLaos is blessed with abundant natural resources and diverse ecosystems, ranging from lush forests to fertile plains. Its strategic location in the heart of Southeast Asia positions it as a potential hub for regional trade and connectivity.Demographic ProfileThe demographic profile of Laos is characterized by its multicultural society, with a diverse array of ethnic groups coexisting harmoniously. While the Lao Loum ethnic group constitutes the majority, numerous minority groups contribute to the cultural richness of the nation. The Lao language sometimes referred to as Laotian is the official language, facilitating communication and fostering national unity.Government Policies and InitiativesGovernment’s Economic Development PlansThe Lao government has formulated comprehensive economic development plans aimed at achieving sustainable growth and poverty reduction. These plans prioritize infrastructure development, human capital investment, and private sector engagement to stimulate economic activity and improve living standards.Incentives for Foreign InvestmentTo stimulate foreign direct investment (FDI), the Lao government offers various incentives, including tax breaks, streamlined administrative procedures, and land lease options. These measures aim to attract investors across sectors such as manufacturing, tourism, and energy.Infrastructure DevelopmentTransportation NetworksDue to its landlocked status and the need to enhance connectivity with neighboring countries, investment in transportation infrastructure is a priority for Laos. The development of roads, railways, and airports facilitates trade, tourism, and regional integration, driving economic growth and development.Energy InfrastructureLaos has abundant hydropower potential, which it aims to harness for domestic consumption and export. The development of hydroelectric dams, alongside investments in renewable energy sources such as solar and wind, contributes to energy security and sustainable development goals.Telecommunications and Digital InfrastructureImproving telecommunications and digital infrastructure is essential for promoting economic growth and connectivity in Laos. Investments in broadband expansion, digital literacy programs, and e-government initiatives enhance access to information, facilitate business operations, and foster innovation.Role of Technology and InnovationAdoption of Technology in Various SectorsThe adoption of technology and innovation is transforming various sectors of Laos’ economy, including agriculture, healthcare, finance, and education. Digitalization, automation, and data analytics enhance efficiency, productivity, and service delivery, contributing to economic growth and competitiveness.Innovation Ecosystem and Entrepreneurship DevelopmentFostering an innovation ecosystem and supporting entrepreneurship are key priorities for promoting economic dynamism and resilience in Laos. Initiatives such as startup incubators, venture capital funds, and innovation hubs empower aspiring entrepreneurs to turn ideas into viable businesses, driving innovation-led growth.LADT Shaping the Future of Digital Currency in LaosHow LADT is helping LaosLADT, the digital currency backed by the Lao government, holds the potential to revolutionize financial transactions and promote inclusive economic development. By leveraging blockchain technology, LADT facilitates seamless and secure transactions, enhances financial inclusion, and fosters economic empowerment for all segments of society.LADT Leads to Poverty ReductionThe adoption of LADT can contribute to poverty reduction by expanding access to financial services, reducing transaction costs, and enabling efficient and low-cost transfers. By empowering individuals with greater control over their finances, LADT promotes economic resilience and uplifts disadvantaged communities.LADT Makes Transactions SeamlessLADT streamlines transactions by eliminating intermediaries, reducing processing times, and enhancing transparency in financial transactions. Its decentralized nature ensures trust and security, while its digital format enables convenient and borderless payments, facilitating domestic and international trade.ConclusionIn conclusion, exploring the economic landscape of Laos reveals a complex interplay of factors shaping its development trajectory. From historical legacies to policy initiatives, from infrastructure investments to technological innovations, Laos’ economy is poised for growth and transformation.As Laos navigates its path towards sustainable development and prosperity, continued exploration and engagement are essential. By understanding the challenges, seizing the opportunities, and leveraging innovative projects like LADT, everyone from travelers to investors can contribute to building a resilient, inclusive, and prosperous future for Laos and its people.

23 Jan, 2024

Trains From Bangkok to Vientiane in Laos to Commence in April 2024

The Vientiane (Khamsavath) Railway Station is set to open in April 2024 for shuttle trains crossing over the border from Nong Khai. There are also plans for at least two trains a day to transport passengers all the way from Bangkok to Vientiane in Laos, with a fare of less than 300 baht for the cheapest ticket. All three classes of travel will be available.PLEASE NOTE: This is the metre-gauge line from Thailand. It has nothing to do with the high-speed line that is still under construction.Pichet Khunatamruk, the Director-General of the Department of Rail Transportation (DRT), revealed in an interview with Daily News that the DRT will meet with the Laotian Ministry of Railways and other relevant agencies on 6th February 2024. The purpose of this meeting is to finalize regulations for rail travel between Thailand and Laos on the 7.5-kilometer section from Nalaeng to Vientiane (Khamsavath), which is an extension of the Nong Khai-Nalaeng railway line.Following these discussions, trial runs are planned to commence from Nong Khai to Vientiane (Khamsavath) in February 2024. Though these will not be open to the public. The regular service is expected to begin in April 2024, with fares of 60-70 baht and a travel time of approximately 20 minutes.According to Pichet, there are still unresolved issues regarding immigration procedures for passengers crossing the border from Thailand to Vientiane (Khamsavath). The ultimate goal is to streamline the process so that passengers are only stamped once, either in Nong Khai or Vientiane, Laos. Currently, passengers must undergo stamping in both Nong Khai, Thailand, and Vientiane, Laos.Furthermore, Laotian train drivers will replace Thai train drivers at the Nong Khai station. Staff from the National Railways of Laos have already completed theoretical and practical training in locomotive driving and ticket sales, enabling them to operate immediately once the service begins.Pichet mentioned that nine Laotian train drivers have been trained to drive Thai locomotives. These drivers will be responsible for operating trains between Nong Khai and Vientiane (Khamsavath), with a driver change occurring at Nong Khai station. The purpose of this change is to avoid potential legal issues. If a Thai train driver were to cause an accident or incident in Laos, they would be subject to Laotian law and would have to go through the court system in Laos.According to Pichet, extending the rail service to Vientiane (Khamsavath) will greatly facilitate travel for Thai and foreign tourists from Bangkok to Vientiane by train. The current Bangkok-Nong Khai trains, which operate six round trips per day, will be converted to Bangkok-Vientiane (Khamsavath) service. Initially, there will be two round trips per day, offering all three classes of service.Additionally, the local shuttle trains running between Nong Khai and Nalaeng will also be transformed into Nong Khai-Vientiane (Khamsavath) service, with four round trips per day.Pichet further mentioned that upon arrival at the Vientiane (Khamsavath) station, passengers can conveniently access public transportation services provided by Laos, such as mini-vans, tuk-tuks, and taxis. This will enable passengers to easily reach the city center of Vientiane, which is approximately 7-9 kilometers away.